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HARTFORD -- Lawmakers are scrutinizing the state government's efforts to root out fraud, abuse and errors in the nearly $5 billion Medicaid program.

The review comes as the Malloy administration is warning that Medicaid spending is likely to exceed budgeted amounts if current trends continue.

This troublesome forecast makes achieving savings and efficiencies in the program all the more important.

At $4.7 billion, Medicaid makes up 20 percent of this year's $20.5 billion budget. Even a small percentage of improper payments can have a significant effect on costs.

The Department of Social Services reports that $198.5 million in improper Medicaid payments have been recovered over the last three years, including $69.5 million last year alone.

Over this period, the agency also estimates that another $866.5 million in future payments have also been avoided, representing significant savings.

"Preventing and uncovering fraud in Medicaid and other public benefit programs is a renewed priority for DSS under this administration," said Roderick L. Bremby, the agency's commissioner.

An average of nearly 500,000 people receive Medicaid benefits every month through a network of 29,000 providers in Connecticut. Bremby's department administers the program.

The legislature's Program Review and Investigations Committee is evaluating the state's procedures for preventing, detecting and recovering improper payments in the Medicaid program due to fraud, abuse and errors.

Its findings could be used to propose legislation to make changes to the program.

"The governor and legislature have supported additional resources to bring to bear on the problem, and attention from the Program Review and Investigations Committee is also welcome," Bremby said.

The committee and its staff are looking into payments made on behalf of individuals who are ineligible for Medicaid.

The scope also includes payments made for services that are not covered, services that are billed but not received, and duplicate services.

Additionally, the study is reviewing payments for services that did not receive prior authorization when required and that do not include credits for applicable discounts.

Lastly, it is examining how the state investigates providers suspected of fraud and abuse, as well as any resulting sanctions.

Medicaid is a federal-state program that helps pay for health care for the elderly, needy and disabled. It also assists low-income families with children.

The state and federal governments jointly fund Medicaid. The state receives 50 percent reimbursement from the federal government for most services provided.

The U.S. Government Accountability Office has designated Medicaid as a high-risk program because it is particularly vulnerable to fraud, waste, abuse and improper payments

In 2011, the Centers for Medicaid and Medicare reported Medicaid had improper payments of $21.9 billion nationally. This is the second highest amount of fraud for any federal program, after Medicare.

The federal government requires states to develop procedures to reduce improper payments that result from fraud, abuse and errors.

In Connecticut, the Department of Social Services, the Division of Criminal Justice and the Office of Attorney General share responsibilities for preventing, detecting and recovering payments that were improperly made in the Medicaid program.

Bremby, the DSS commissioner, said the great majority of Medicaid-enrolled providers are not defrauding the program.

"We move aggressively against those who are found to be abusing their relationship with the program," he said.

The DSS refers suspected cases of improper payments or overpayments to the attorney general's office to pursue recovery through the courts.

In June, Attorney General George Jepsen sued 28 individuals, dental practices and corporations for allegedly participating in an elaborate scheme to defraud Medicaid of $24 million that DSS investigators first identified. The defendants include a Cheshire dentist and two dental practices in Waterbury.

The legal action seeks triple damages of $72 million and civil penalties.

The DSS also refers cases of suspected fraud to the Division of Criminal Justice for possible criminal prosecution. The department also works closely with the U.S. Attorney's Office.

The legislature and Gov. Dannel P. Malloy have authorized the hiring of additional investigators in DSS and the Medicaid Fraud Unit of the Division of Criminal Justice to bolster detection, prevention and recovery operations.

The DSS is bringing on seven additional investigators next month, said David Dearborn, a departmental spokesman.

Malloy said the department's outdated computer technology has hindered efforts to curtail improper payments and overpayments in Medicaid.

"I think we spend a fair amount of time trying to curb waste, fraud and abuse," he said. "The biggest single problem that we have faced in that is, unlike many other states, we never modernized our information technology system."

Malloy said his administration is pursuing a federal grant that will cover 90 percent of the cost of modernizing the department's computer system. He said previous administrations did not go after this federal funding.

"That was unfortunate. My administration has a very different attitude about those technologies. I think once more of the new system is in place we'll do a better job," he said.

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